Property market turns attractive to foreign investors

Last week Creed Group and An Gia Investment together with Phat Dat Real Estate Development Company (PDR) inked a deal to spend VND12 trillion (US$500 million) on River City, a project with 8,000 apartments plus retail outlets and other facilities in HCMC’s District 7.

Earlier Creed Group, a Japanese investment fund with total assets of US$5 billion, tied up with An Gia Investment to develop Angia Skyline and Angia Riverside condo projects.

Keppel Land Limited has entered into a conditional investment agreement to hold a 40% equity interest in Empire City Limited Liability Company, the developer of the US$1.2 billion Empire City complex in the Thu Thiem New Urban Area in District 2, HCMC.

The US$93.9 million deal made Keppel Land the biggest shareholder in the joint venture, which also involves two Vietnamese firms – Tien Phuoc Real Estate JSC and Tran Thai Real Estate Co. Ltd. with a combined stake of 30%, and Hong Kong real estate private equity fund Gaw Capital Partners with a 30% stake. The deal is expected to be complete in the second quarter of this year.

According to industry watchers, investors must secure long-term capital for the large project as it is scheduled for completion in 2022.

Besides, Sapphire JSC under Australia’s Sakkara Group is looking for medium to large-scale property projects after it has divested its minority shareholding in both Refico Real Estate Group and in the City Garden joint venture in HCMC. The firm said it would buy land or form a joint venture with landowners.

Local enterprises have also been active with M&A deals. Dat Xanh Real Estate Group has spent VND61 billion raising its stake at Agriculture Printing JSC to 99.99%, or VND111 billion, while taking over the right to develop Opal Tower, a condo-office-commercial center complex in HCMC’s Thu Duc District.

Thu Duc Housing Development JSC plans to join hands with Foreign Trade Development & Investment Corp. of HCMC (Fideco) to develop a project in District 1 and a high-class residential area in Can Gio District. The company will cooperate with Lien Phuong Garment and Textile JSC to construct Vinatex Building and Thu Duc House-Lien Phuong residential area.

According to M&A consultants, real estate transfer deals are complicated. Both buyers and sellers are not willing to announce their deals unless they are required to disclose information as stipulated for listed companies.

Speaking to reporters, Le Hoang Chau, chairman of the HCMC Real Estate Association, said the market will see more M&A deals, joint ventures and partnerships in the sector.

According to experts, the real estate market can benefit from macroeconomic stability and Vietnam’s intensified international integration. Many foreign investors will join the market via M&A deals.

Investors in recent M&A deals or joint ventures are upbeat about the outlook of the property sector.

According to Keppel Land, Vietnam as a member state of the Trans-Pacific Partnership (TPP) and the ASEAN Economic Community (AEC) could draw foreign investment into the real estate sector. 

Furthermore, more favorable rules in the housing and property trading laws, improved infrastructure, fast growth in middle-income earners and rapid urbanization will spur demand for housing and high-class office space in Vietnam.

Ang Wee Gee, CEO of Keppel Land, said in a statement that Vietnam, especially fast-growing HCMC, is one of Keppel Land’s key growth markets.

Toshihiko Muneyoshi, chairman of Creed Group, said local citizens and businesses have large demand for property products.

Experts said the property sector is still on a recovery trajectory this year.